Second Mortgage Foreclosure

The second foreclosure of the mortgage

At Bartram, the Florida Supreme Court finds that the statute of limitations does not prevent the submission of a second enforcement suit for mortgages. U.S. Bank National Association, No. SC14-1265, 2016 WL 6538647 (Fla.

Nov. 3, 2016), which brings much-needed clarification to the open issue of whether the release of a mortgage foreclosure claim more than five years after its submission prevents the creditor from submitting a new foreclosure claim under Florida's five-year limitation period for breaches of contract."

Because of the large number of foreclosure cases in Florida during the domestic foreclosure crises, foreclosure measures have often taken five years or more to make their way through the judicial system, only to be released for causes unconnected to the case.... Unter these conditions, borrower have generally been arguing that because the submission of the claim has the effect of "speeding up" the credit - i.e. making the full amount of the credit due and payable again - the five-year limitation period starts to run with the total amount of the credit at the date of the submission of the claim.

On that ground, the rejection of the application more than five years after its submission leads to a new enforcement application which is subject to a permanent limitation period. Creditors argued that bringing a foreclosure suit did not alter the instalment characteristics of the loan, which results in a new and distinct failure each and every times the borrower fails to make a month's payments.

Therefore, the creditors claimed that a new enforcement claim is not time-barred as long as the missing month's instalment on which the new measure is based is within the five-year limitation limit. At Bartram, the Florida Supreme Court on the lenders' side stated that "the absence of a conflicting clause in the mortgage and the bond, the rejection of the enforcement claim against the mortgage creditor has the effect that the contracting party returns to its state of appeal before enforcement if the mortgage continues to be an instalment credit and the mortgage creditor has the right to make further instalments without being obliged to make the full amount due under the notes and the mortgage.

" Bartram, 2016 WL 6538647 at *1. If the Mortgagor is again in arrears after the dismissal of the claim and does not remedy the arrears, the Mortgagor is not prevented from bringing a second or succeeding enforcement claim "if the purported succeeding arrears occur within five years after the succeeding enforcement claim".

Relevant facts In 2005, the Lewis Bartram claimant received a $650,000 US dollar mortgage on his St. Johns County, Florida home. Mortgage was a standardized mortgage with conditions customary in mortgage loans throughout the United States, which included a requirement to require the creditor to notify the debtor of any delay and to allow the debtor to remedy it before bringing a foreclosure suit, and to further inform the debtor of his right under the mortgage to resume the mortgage after haste.

As regards the right of re-establishment, the mortgage expressly provides that if the debtor has paid all overdue sums before the date of an enforceable judgement and fulfils other requirements, the mortgage "remains fully enforceable as if there had been no acceleration". As Bartram suspended payment of its mortgage on 1 January 2006, U.S. Bank, N.A. (the Bank) filed a foreclosure action on 16 May 2006.

During 2011, after almost five years of litigation, the case was rejected after the bank did not attend a case meeting against which the bank had not appealed. About one year after the release and six years after the Bank's foreclosure proceedings were brought, Bartram brought a lawsuit cross-action to file a verdict against the Bank in a seperate foreclosure suit concerning a second mortgage on the hereditament.

In the Kreuzklage, the court tried to "annul the mortgage and the undisclosed ownership of the property and claimed that the limitation period prevented the bank from submitting another enforcement suit. Bartram's main point was that Florida's five-year limitation period started and ended from the date of submission of the bank's previous enforcement suit, which prevented the bank from submitting another enforcement suit.

Bartram and the courthouse concurred and expedited proceedings in his favour, cancelled the bank's mortgage and released the bank's pledge of Bartram's assets. The Florida Fifth District Appeal appealed, stating that the bank was not deterred by the limitation period from bringing a new foreclosure suit against Bartram just because more than five years had elapsed since the initial hasten.

{\a6}(U.S. Bank Nat'l Ass'n v. Bartram, 140 Sun. 3d 1007 (Fla. {5. DCA 2014)). The Fifth District's achievement of this finding was primarily grounded in the previous ruling of the Florida Supreme Court in Singleton against Greymar Associates, 882 So. 2d 1004, 1008 (Fla. 2004), which came to the conclusion that the theory of judgement does not preclude the submission of a follow-up enforcement suit due to a later case of delay that "creates a new and sovereign right for the mortgagor to speed up payments in the note".

Singleton states that "[w]hile it is correct that a foreclosure and an accelerated settlement arising from the same failure may prevent a follow-up operation on that failure, an accelerated settlement and an accelerated settlement arising from consecutive and different failures constitute a specific and specific problem. Analyzed Singleton, the Fifth District came to the conclusion that its argumentation is applicable to the limitation period and the jurisprudence teaching, explained:

On the basis of Singleton, a failure after an unsuccessful foreclosure effort provides a new remedy for limitation even if an expedited case had been initiated and the first case was rejected according to its merits. However, the first case was rejected after the first time. We therefore come to the conclusion that a foreclosure claim for non-payment after the order of release in the first foreclosure claim is not time-barred by the limitation period.

. provided that the following enforcement proceedings are instituted against the following losses within the limitation of time. Bartram, 140 Sun. 3d at 1013-14. The Court found that'in the case of any later delay, the limitation period shall run from the day of each new delay which gives the security right owner the right, but not the duty, to expedite all amounts then due under the bill of exchange and the security right over real property'.

" Bartram, 2016 WL 6538647 at *8. Because " after the release the contracting partners are put back into the same contract as before, with which the housing finance stayed an instalment credit, and the speeding up of the housing finance explained in the fruitless enforcement suit is cancelled. It also held that the rejection of the former enforcement proceedings, with or without detriment, was not essential for the limitation period assessment and stated that "any later delay occurring after the rejection of an earlier enforcement proceedings gives rise to a new plea, whether or not that rejection was detrimental".

Bartram's contention, on the other hand, would mean that'the speeding up of the credit was in effect before the definitive judgement' and that'the mortgage debtor would still have to pay the speeded-up amount[even] after the release, which actually nullified the reintegration clause..... Because the instalment character of the loans ended, the creditor was given'only one way to recover the mortgage despite the appearance of default'.

Therefore, the Court of First Instance came to the conclusion that after the rejection of an initial enforcement claim, whether or not the claim was rejected with or without detriment, the contracting partners "return to the same contract with the same continuous obligations". The takeaways ruling of the court in Bartram solves an important problem in Florida and provides long-awaited clarification for this highly tied limitation period defence in the Florida court.

The Bartram makes clear that a release, with or without bias, in a foreclosure suit concerning a basic mortgage with a reintegration clause, easily restores the prior exploitation ratio of the party. After discharge, the borrower is given the option to resume his payment on a regular basis and the creditor reserves the right to bring a new enforcement suit due to delay within the limitation period.

However, with this ruling, the arrears of most foreclosure cases pending in Florida can now continue with borrower and lender who know the exact timing of the limitation period applie.

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